* Atlanta Fed head signals unchanged pace of cuts in
* Sees broader future mix of policy tools than just Fed
(Adds comment on Fed funds rate)
By Angus McDowall
RIYADH, May 13 Economic conditions in the United
States would have to shift dramatically for the Federal Reserve
to change the rate at which it is winding down its
money-printing programme, a senior official at the central bank
said on Tuesday.
"It would take a rather dramatic change" to adjust the
tapering of the Fed's monthly bond purchases, Dennis Lockhart,
president of the Federal Reserve Bank of Atlanta, said in the
Echoing other recent comments by Fed officials, Lockhart
also said the Fed would be likely to use a broader mix of policy
tools in future, relying less heavily on the overnight federal
Lockhart, who said he was speaking in his personal capacity,
does not have a vote this year on the Fed's policy-setting board
but he participates in its discussions and is considered to be
near the centre of its policy spectrum.
The Fed began scaling back its bond-buying programme - aimed
at pushing down borrowing costs - in recent months amid signs of
an upturn in the jobs market.
It is currently buying $45 billion each month, a figure
Lockhart said on Sunday in a speech in Dubai should fall to zero
by the central bank's October or December meeting.
The Fed introduced the bond purchases as an extra stimulus
on top of ultra-low overnight interest rates, which it has kept
near zero since late 2008 to help the U.S. economy recover from
a profound recession.
The central bank's primary tool for conducting monetary
policy, the Fed funds rate measures the interest at which
commercial banks lend money parked at the Fed to each other.
Lockhart told reporters that while the Fed funds rate still
had a role in the policy mix, it might not be as dominant in
"There are some longer-term policy tools like term repos,
term reverse repos, and term deposits, so we would neutralise
excess reserves by paying a little bit more to a bank to
effectively sideline their reserves for a period of time," he
Dallas Fed chief Richard Fisher suggested last week that the
central bank could replace the Fed funds rate in the years
ahead, and other tools had been tested.
The U.S. economy hardly grew in the first quarter but has
gathered pace since.
Also on Sunday, Lockhart said he expected growth to
accelerate in the second quarter to an annual rate of 3 percent
or more, but it might not be clear for some time if the pick-up
(Reporting by Angus McDowall; Writing by Martin Dokoupil;
Editing by Jeremy Gaunt and John Stonestreet)